Head Chef memo to the Sushi community — a year in review

A list of the past year’s achievements & coming opportunities.

Amazingly, four weeks ago, I completed my first year as Head Chef at Sushi. Where does the time go? I wanted to write a memo to you, the community, and those interested in Sushi’s daily workings, highlighting our success and the challenges we’ve overcome in the past year. Quickly summarizing the past year: we focused primarily on business administrative operations, product development, tokenomics modeling, and identifying new opportunities, like perps/futures.

Foreword

I think it’s important to recap the journey that led me to Sushi. Before crypto (B.C.) I founded and ran an engineering consulting firm for 15 years. My background is in computer engineering, and after entering the workforce at Dell Computers, I quickly realized I desired to become an entrepreneur. While running my own company, I learned much about self-reliance, resiliency, and perseverance. Ultimately, I started looking for a new challenge when I stumbled on Bitcoin in 2014. Trustless P2P money spoke to me philosophically, and I became enamored with the technology. Eventually, I wound down my consulting firm and began contributing engineering and community management duties to several projects, with varied levels of success.

Fast forward several years, and after the entertaining and stressful bull market of 2020–2021, I took time to regroup and think again about the crypto philosophy that initially attracted me to the industry: trustless P2P money. While exploring where I wanted to commit my time and energy, a colleague told me that Sushi was searching for a new Head Chef, effectively a steward of the protocol and community. While campaigning for the Head Chef role in 2022, I focused most of my attention on product and community improvements as an outsider. However, after securing the position, I became intimately acquainted with the project’s inner workings. Many preconceived notions as an outsider became null as I gained a complete view.

Sushi’s History

It’s no secret that over the three-plus year history of Sushi, the protocol faced multiple obstacles, from internal and external drama to product development hurdles. I recently read a quote that said, “People get angry because they care,” which, to me, beautifully sums up Sushi’s vibrant history. Many people care about Sushi and its future, from community members to projects that deploy their liquidity, as well as the core contributors who maintain the protocol and develop and deploy new products and features. It was my hope when I joined that I could effectuate a new chapter for Sushi promoting the DAO’s best interests, reinvigorating its spirit of innovation.

Goals & Product

I officially began my role as Head Chef on October 4th, 2022, and to help promote a spirit of innovation and foster a renaissance within Sushi, my first meetings with the team focused on creating an administrative and product roadmap. The goals for the administrative roadmap were straightforward: implement a legal entity to provide limited liability protections and essential administrative functions. Furthermore, we explored areas within the protocol that would provide competitive advantages and bring the swap protocol to feature parity in the market. Out of these discussions, we produced Route Processor, our router featuring non-cannibalistic liquidity aggregation, increasing by 25% the swap routes we serve and providing more excellent coverage for assets users can trade while receiving competitive pricing.

Also, one of the unique product challenges Sushi faces since scaling to more than 30 networks is the dependency on unreliable data. All multi-chain DEXs eventually experience this bottleneck, which can, for example, affect liquidity providers’ (LPs) ability to manage their positions optimally. So, we’ve overhauled the product stack to provide real-time pool data using a proprietary solution to offer better liquidity provider tooling soon, making Sushi the premier DEX to manage your liquidity reliably. With our commitment to innovation, we will continue to build towards delivering the best user experience for swaps and liquidity providers.

Lastly, we released version 2.0 of our popular cross-chain product, SushixSwap. SushixSwap was the first cross-chain product offered to the market, and we spent the past several months completely rearchitecting SushixSwap’s framework to be fully modular so that we can add new networks more quickly and safely. Currently, you can perform cross-chain swaps on seven networks, including Ethereum, Arbitrum, Polygon, Optimism, BNB, Avalanche, and Base, with more than 30 networks planned for integration. SushixSwap is another example where Sushi creates innovative solutions for the market and its users.

Treasury, Budget, and Kanpai

An area where I focus considerable attention is curating and maintaining an operations budget. When I joined Sushi, the operational budget approximated 8M USD annually. By renegotiating contracts and eliminating redundant expenditures, we reduced the annual operating budget to ~5.5M USD per year–some infrastructure expenses vary due to usage. These changes produced a savings of ~30%. I anticipate this budget to remain roughly stable through 2024.

Although controversial then, by its completion, the Kanpai proposal that allocated 100% of the protocol swap fees from token holders to the protocol will have produced roughly 5M in proceeds. Kanpai helped secure funds to offset unforeseen expenses, like legal costs and exploit refunds. However, I’m excited to introduce new tokenomics and return value to users via our new token model once Kanpai expires.

Furthermore, by the end of 2023, we’re projected to secure ~10M USD in grants from partner protocols integrating with Sushi. These funds go to fund operations without having to task the Treasury with disbursing assets, where the DAO can potentially realize more significant value through diversification to yield-bearing opportunities or in better market conditions. Ultimately, the goal is to produce lasting value for the DAO by responsibly allocating its resources.

Tokenomics

MasterChef is one of the most forked contracts in all of DeFi. It may be Sushi’s single most significant innovation. It unlocked substantial utility for the Sushi token, and we aim to continue with the tradition of empowering token holders by providing contemporized tokenomics to the community. Sushi’s initial token model had good intentions; although flawed in its outcome, the mechanics were wholesome and provided community oversight and ownership of the protocol in a truly decentralized manner. With our upcoming newly redesigned token model, we hope to deliver the next level of decentralized ownership and value for all stakeholders while aligning with our most ardent supporters via optimal distribution mechanics. Look for the new token model proposal to go live on the Sushi forum in the next week or two.

Community & Governance

Sushi’s early superpower was its ability to cultivate a vibrant community. Some of DeFi’s brightest minds began or boosted their DeFi/crypto journey with Sushi, and it helped promote a community of passionate individuals working towards a common goal. One of the challenges I’ve experienced is balancing the operational demands of my typical day-to-day duties with community interaction. When I campaigned for the Head Chef role, and early on after joining the team, my goal was to unite people and promote the best interests of the DAO. Frankly, I think I can do better going forward. As we advance, I aim to provide the community with the tools, resources, and information they need to help steer Sushi forward together.

A vibrant community is highly engaged and efficient. With our new tokenomics, we provide new mechanisms, like share-based quadratic voting, to help bolster and distribute ownership in a more egalitarian manner, aiming to boost governance outcomes. We’re excited to move governance on-chain and unlock new possibilities, which we detail in our upcoming token model. Yet, mechanics are one part of the equation. The community needs to feel empowered to take action. We do that by creating a vibrant Sushi community together.

Future Products

We must continue identifying areas where Sushi can grow and serve users via innovative swapping products. First, decentralized, on-chain trading will continue to gain market share against its centralized counterparts as complexity is abstracted away from the user experience and safety.

Second, I’m excited that Sushi can experience significant success in the on-chain perpetual futures trading vertical, and community members can expect to see Sushi enter the perps market in early 2024.

Conclusion

While I feel this update provides clarity and context regarding the great work done by the Sushi team in 2023, I understand the community’s desire for more frequent communication and pledge to provide regular updates through the end of 2023 and throughout 2024. I believe that 2024 will see the Sushi DEX regain prominence through the innovation we’ve delivered and the efficient execution of our 2024 product roadmap. In conclusion, we aim to provide an outstanding liquidity layer and expand to new verticals, i.e., on-chain perpetual futures. Lastly, thank you all for supporting Sushi and for your feedback in the many areas that help us improve.

Thanks, frens.

Jared